No hike in H2 borrowing target of Rs 2 lakh crore

In the hope that its recent efforts to cut down spends would show results, the finance ministry on Thursday said it would stick to its Budgeted borrowing plan of Rs 2 lakh crore for the second half of the fiscal but admitted that the fiscal deficit could overshoot the target of 5.1 per cent of GDP.

"The government will borrow Rs 2 lakh crore in remaining period the current fiscal. We will complete the second half borrowing by end of February," said Arvind Mayaram, secretary, department of economic affairs in the finance ministry after a meeting to decide the borrowing calendar for the second half of 2012-13.

The Budget had pegged the Centre's gross borrowing for 2012-13 at Rs 5.69 lakh crore. In order to make more room for private sector borrowing, the finance ministry had front loaded its borrowing programme in the first half of the fiscal. It is expected to complete 65 per cent of it by raising Rs 3.7 lakh crore through bonds by September-end.

Mayaram also re-iterated the government's commitment to fiscal consolidation but conceded that the fiscal deficit could overshoot the Budget target and touch 5.3 per cent of the GDP this financial year. "I don't think we will be able to contain fiscal deficit to our Budget plan of 5.1 per cent (of GDP). It could be 5.2 to 5.3 per cent, which is doable," he said.

Meanwhile, noting that the funding requirements for the second half were drawn based on projected cash flows, he said, "It has been decided that short-term borrowing through treasury bills for third quarter will be Rs 1,30,000 crore. With redemption of T-Bills for the period at Rs 1,49,000 crore, net amount will be a negative Rs 19,000 crore."

He also said the size of the borrowing programme for the second half of the fiscal needs to consider the market demand for securities and evolving macro-economic conditions and their implications for the debt market.

... contd.

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